Just when you thought it might be safe to jump back into the stock market, a potential trade war between China and the U.S. now threatens to derail global growth before it begins again. In the latest salvo, America has slapped a punitive 35% tariff on Chinese tires on the eve of the G-20 summit in Pittsburg . The timing couldn't be worse. As host of the G-20 summit, Barack Obama is trying to accomplish two main goals. The first is ensuring that global growth continues and the second is to bring the world's emerging economies into the fold. So far, on both counts he has failed.

Nothing could be more detrimental to the nascent economic recovery than the collapse of global trade. Over the last thirty years, increasing global trade has helped lift hundreds of millions of people out of poverty and increased rather than shrunk the size of the global economic pie. Yet, in spite of this enviable track record, global trade has never suffered from a shortage of detractors, most notably, trade unions. While opposition to free trade is nothing new, having a sympathetic ear in the White House is.

For some, Obama's move is nothing more than payback to some of the unions that helped elect him. Namely, the United Steelworkers with their powerful base of support in important swing states such as Wisconsin , Pennsylvania and Ohio . In terms of economic influence, the tariff will accomplish almost nothing. Consumers won't be benefiting a whit from the tariff and the number of workers affected is so small it is barely a rounding error on the American workforce.

Yet, Obama felt compelled to act. And the decision comes at a risky time. Even though George Bush in November of 2008 and Obama in April of 2009 both pledged along with other world leaders to “refrain from raising new barriers to investment or trade in goods and services,” protectionist sentiments globally run high. The “Buy American” is just one example of recent U.S. government moves that have stoked concerns globally that Obama may not really be as committed to free trade as he has suggested.

And it is this image of a left-leaning U.S. president who is easily swayed by trade unions and other vested interests that has some pundits worried. Could Obama be equally as soft on reigning in America 's massive debts when it comes time to pay the piper? Is Obama's strategy of antagonizing China , America 's biggest banker, at a time of massive new borrowings really smart? For some, the answer is obvious—no .

America needs to work with China on more than tires and Treasury bonds. It needs China 's help on the environment and in restoring order and balance on the Korean peninsula. What America doesn't need is an angry China , pulling away from the bargaining table and launching retaliatory measures against American car parts or poultry.

The stock market has rallied strongly from its March lows. Savvy investors should always be prepared for the inevitable pullback in the market. Lately, the market has been fixated on the poor existing home sales number out of the U.S. and the fact that much of the rebound in the market is more to do with corporate cost-cutting and government stimulus than real economic growth. A costly and ill-timed trade war with China could help to erase some the strong gains we've seen in the stock market over the last few months. Hopefully it won't come to that, but investors should err on the side of caution.

As I lay out in my new book, Shell Shocked—How Canadians Can Invest After the Collapse (John Wiley & Sons), America 's global influence is waning. How America adjusts to the new reality of a resurgent Asia, led by China , will help to determine the prospects for investors of all stripes. Global trade over the last several decades has helped to raise everyone's economic prospects. And America , as the world's only superpower, has benefitted the most from global trade. A move towards greater protectionism would be bad for America and bad for the rest of the world.

And while the latest bout of silliness is probably not going to go unnoticed and unpunished by China, the reality of it is that this new tariff is all about politics and not about economics. Politicians will always do what they do best—talk. But smart investors need to look beyond the rhetoric and the occasional China-bashing to the plain truth— Asia is on the rise and so too is global trade.

Investors looking to capitalize on the long-term trend of Asia rising should limit their exposure to U.S. companies whose earnings are tied to economic strength in America and that fickle U.S. consumer. Investors should buy shares in the companies whose earnings will grow as Asia and the rest of the world begins to pick itself off the mat and trade with one another.

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